News / South Africa

Ilse de Lange
2 minute read
13 Mar 2018
10:25 am

Gupta firms to hit the skids

Ilse de Lange

The Indian state-owned international Bank of Baroda could not be forced to keep its doors open in South Africa to serve 20 Gupta-linked companies.

With the last bank door slammed shut on the Gupta family’s crumbling business empire in South Africa, more of their companies are expected to go into business rescue.

Judge Ntendeya Mavundla ruled in the High Court in Pretoria yesterday that the Indian state-owned international Bank of Baroda could not be forced to keep its doors open in South Africa to serve 20 Gupta-linked companies.

It is the latest in a string of setbacks for the Guptas. Eight of their companies, including VR Laser Services, Oakbay Resources and Energy, Optimum Coal Mine and Shiva Uranium, have already been placed under voluntary business rescue due to “financial distress”.

Last month, Bank of Baroda notified the Gupta-linked companies that it would close its South African operations at the end of March following Nedbank’s notice terminating their relationship.

Baroda had been using Nedbank’s infrastructure to operate in South Africa, but said it was no longer economically viable to operate here.

The Gupta-linked companies were relying on an interim court order to stop Baroda from closing their bank accounts and accused the bank of being in contempt of court.

But Judge Mavundla said that order had nothing to do with Baroda’s commercial decision to exit from South Africa.

He said the bank had every right to terminate any business contracts with the Gupta companies and could not be expected to service their accounts without any infrastructure.

The court could not compel it to go crawling to Nedbank to demand reinstallation of the infrastructure, and other major banks have also turned their backs on Baroda.

The National Prosecuting Authority’s Asset Forfeiture Unit earlier obtained a court order freezing R220 million of the Gupta family’s assets, but the High Court in Bloemfontein last week ordered the release of R180 million of the assets and also ruled that R10 million in Atul Gupta’s personal bank account must be unfrozen.

Judgment is still pending in the High Court in Johannesburg in an application by Export Development Canada to ground the Gupta’s business jet, worth about R485 million, pending the outcome of legal disputes in UK courts over the lease agreement.

Gupta brothers Atul and Ajay were supposed to testify before the parliamentary portfolio committee on public enterprises, which is investigating allegations of state capture at Eskom this week, but reportedly sent a lawyers’ letter to the committee stating they were not in the country.

A commission of inquiry into state capture led by Deputy Chief Justice Raymond Zondo is set to start hearings within the next few months.